US, EU crises down Asian stocks

Bloomberg

Asian stocks slid this week as investors turned their attention to the US budget debate after US President Barack Obama won a second term and the European Commission cut its growth forecast for the debt-saddled region.

Honda Motor Co, the Japanese carmaker that gets about 44 percent of sales from North America, fell 3.2 percent in Tokyo. Canon Inc, a camera manufacturer that depends on Europe for almost one-third of its sales, slid 4 percent.

The MSCI Asia Pacific Index declined 1.1 percent this week to 121.28. The gauge on Friday capped its biggest two-day drop in two months on speculation Greece’s bailout will be delayed and as investors focused on the so-called US “fiscal cliff” of more than US$600 billion in automatic tax increases and federal spending cuts expected in January unless US Congress can reach a budget compromise.

China’s Shanghai Composite Index dropped 2.3 percent. The Chinese Communist Party started its 18th Congress on Thursday in Beijing, where delegates will meet over several days to pick a new leader.

Signs China’s economic slowdown is abating may offer some comfort to Chinese policymakers, which have refrained from further monetary easing since July. Data released on Friday showed factory output and retail sales exceeded forecasts and inflation unexpectedly cooled to the slowest pace in 33 months, signaling that Beijing is boosting growth without driving a rebound in prices.

The data failed to boost investor sentiment, as concern Greece’s bailout may be delayed and the looming US fiscal cliff overshadowed signs an economic slowdown in China is abating.

The US Congressional Budget Office said the US economy will contract by as much as 0.5 percent next year unless the president can reach a compromise with lawmakers.

The MSCI Asia Pacific gauge gained more than 11 percent through Friday from this year’s low on June 4 as central banks added stimulus and data showed a slowdown in China may be bottoming. The index traded at 13.27 times estimated earnings, compared with 13.26 for the Standard & Poor’s 500 Index and 12.09 for the STOXX Europe 600 Index, data compiled by Bloomberg News showed.

Companies that do business in Europe slid after the European Commission cut its growth forecast for the eurozone as the debt crisis ravages southern Europe and gnaws at the economic performance of export-driven Germany.

Of the 502 companies on the MSCI Asia Pacific Index that reported quarterly earnings from Oct. 1 through 6pm in Tokyo on Friday, and for which estimates are available, 55 percent missed expectations, data compiled by Bloomberg News showed.

In other markets on Friday:

Manila rose 0.40 percent, or 22.08 points, from Thursday to 5,468.79.

Wellington ended flat, edging up 2.67 points to 3,957.92.

Mumbai fell 0.86 percent, or 162.58 points, at 18,683.68 points.

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